Goldrush
are celebrating as the value of their preferred precious metal keeps rising.
Tuesday’s gold price surged to $2,141.90 per troy ounce, setting a new high as investors continued to wager that the Federal Reserve will lower interest rates in the latter part of the year.
Gold is regarded as one of the safest investment options. Owning precious metals becomes more desirable than keeping income-producing assets (like bonds) when interest rates decline. On the other hand, other investors bet that gold will retain its value even if it starts to rise because they see it as a hedge against inflation.
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Not only traders are attempting to profit from the gold rush. Gold bars were introduced by Costco in September of last year, and during the first quarter of its fiscal year in 2024, sales exceeded $100 million. Because precious metals are physical assets that are less risky than equities, they are often more popular during periods of economic unrest across the world.
The Fed’s favored inflation indicator, the Personal Consumption Expenditures price index, increased 2.4% for the 12 months that concluded in January. According to Commerce Department statistics published this week, it represents a slowdown from December’s 2.6% gain and is in line with analysts’ estimates.
The core PCE price index, which excludes the more erratic food and energy categories, increased by 0.4% on a monthly basis. Although the increase was expected, the index—which Fed policymakers consider a key indicator of underlying inflation—rose at its quickest monthly rate since February 2023.
According to the CME FedWatch Tool, traders now perceive a roughly 69% possibility that the Fed will lower rates at its June policy meeting. Compared to the beginning of the year, when investors looked certain that rate cuts were on the horizon, that is a decreased likelihood.
In an attempt to get a better understanding of what to anticipate from the Fed in the coming months, investors are focusing on Federal Reserve Chair Jerome Powell’s scheduled congressional hearing on Wednesday.
The price of Bitcoin, which its ardent advocates refer to as “digital gold,” has also increased recently. The cryptocurrency broke through a two-year slump on Tuesday, surpassing its previous high of $68,789, which was attained on November 10, 2021, thanks to the introduction of spot bitcoin ETFs. Tuesday saw a retreat in bitcoin from its peak values.
Stocks have increased dramatically in other places this year, despite a little pause in the rise this week. This year, the S&P 500 index has broken several records; this week, the Nasdaq Composite index achieved an all-time high for the first time since 2021 as Wall Street continues to be swept by the artificial intelligence boom.
